PR Newswire | Jan 6, 2021 06:01AM EST

01/06 05:00 CST

Greenbrier Reports First Quarter Results~ Strong liquidity position~~ $80 million reduction of debt in Q1~~ Orders for 2,900 railcars results in diversified backlog with estimated value of $2.35 billion~~ Challenging market environment produced a net loss attributable to Greenbrier of $10 million LAKE OSWEGO, Ore., Jan. 6, 2021

LAKE OSWEGO, Ore., Jan. 6, 2021 /PRNewswire/ -- The Greenbrier Companies, Inc. (NYSE: GBX) ("Greenbrier"), a leading international supplier of equipment and services to global freight transportation markets, today reported financial results for its first fiscal quarter ended November 30, 2020.

First Quarter Highlights

* Liquidity of $810 million, including $725 million in cash and $85 million of available borrowing capacity. Combined with $150 million of additional initiatives in progress totals $960 million. * Diversified new railcar backlog as of November 30, 2020 was 23,900 units with an estimated value of $2.35 billion, including orders for 2,900 railcars valued at approximately $260 million received during the quarter. Deliveries in the quarter were 3,100 units, representing a nearly 1.0x book-to-bill. * Net loss attributable to Greenbrier for the quarter was $10 million, or $0.30 per diluted share, on revenue of $403 million. * Adjusted EBITDA for the quarter was $23 million, or 5.8% of revenue. * Board declares a quarterly dividend of $0.27 per share, payable on February 16, 2021 to shareholders as of January 26, 2021 representing Greenbrier's 27th consecutive dividend. * Board extends $100 million share repurchase program through January 2023.

William A. Furman, Chairman & CEO commented, "Greenbrier remains focused on sustaining a high level of liquidity and carefully managing our manufacturing footprint in order to continue to generate operating cash flow. Consistent with these goals, we ended the quarter with a strong cash position while meaningfully lowering our debt during the quarter. Our prior cost reduction initiatives, combined with inventory and syndication activity, produced solid cash flow in the quarter. Although a challenging operating environment persists at least through the first half of fiscal 2021, our $2.35 billion backlog provides a baseload for our manufacturing operations and visibility into forward production requirements. We will continue to adjust our manufacturing footprint based on our outlook, while also ensuring we do not constrain our ability to scale capacity as demand increases. New order inquiries continue as rail traffic increases and velocity declines. This positions us well for the market improvements we expect later in calendar 2021. Finally, our strategic actions over the past two years, particularly the acquisition of ARI in the U.S., have delivered results. We have reduced our costs and secured our positon as a market leader on three continents, especially in our core North American market."

Business Update & OutlookGreenbrier continues to operate safely and efficiently as we execute our COVID-19 response plan. Protecting employees within the work environment remains our top priority. Community spread is increasing in many areas requiring continued vigilance. Greenbrier maintains a low incident rate of COVID-19 among our employees by adhering to CDC-recommended preventative and remedial actions across the company. We also take instant action to prevent spread at the first signs of any infection.

In light of the consequences of the pandemic and an associated economic downturn, preserving the financial health of Greenbrier is imperative. Maintaining cash flow and liquidity are essential components of Greenbrier's current operating strategy. We have been very successful in this regard. Our diversified $2.35 billion backlog provides a baseload of activity as we gain greater visibility into customer needs as the year unfolds.

Greenbrier's scale and capabilities have significantly broadened since the Great Recession, a little more than a decade ago. Our backlog today is more than five times larger than it was as of the end of 2010. Our stronger market position is reflected in our share of North American industry railcar orders in the first nine months of calendar year 2020 and in the diverse types of railcars we are building. In Europe, broad macroeconomic reforms to address climate change are ushering in an era of modal shift for freight as the continent moves from polluting and congested road travel to clean and efficient rail service. This should generate significant market growth in the years to come. Regulatory-driven freight wagon demand in Europe supplements the increase in commodity-driven and replacement freight wagon demand that typically gathers momentum in a recovering economy. On three continents, Greenbrier is well-positioned for both the present and the future with a strong balance sheet and a streamlined manufacturing footprint that we can scale as our markets return to higher demand levels.

Financial Summary

Q1 FY21 Q4 FY20Sequential Comparison - Main Drivers

Revenue $403.0M $636.4M45% fewer deliveries due to weak demand environment

Fewer deliveries partially offset by Gross margin 10.1% 10.5% operating efficiencies in NA Manufacturing

Selling and Continuing cost reduction initiatives administrative $43.7M $46.3M result in lower employee-related and discretionary expenses

Adjusted EBITDA $23.2M $55.7M Lower operating earnings

Tax benefit from favorable discrete Effective tax rate (55.5%) 21.3% items related to foreign currency fluctuations

Net earnings attributable to ($3.3M) ($7.8M)Lower profitability because of fewer noncontrolling deliveries at GIMSA joint venture interest

Adjusted net Lower gross margin reflecting fewer earnings (loss) ($10.0M)$5.5M^ deliveries partially offset by income attributable to (1) tax benefit and lower selling & Greenbrier administrative expense

Adjusted diluted ($0.30) $0.16^ EPS (1)

^ Excludes expense of $5.6 million ($0.16 per share), net of tax and(1) noncontrolling interest, associated with ARI integration related expenses and severance expenses.

Segment Summary

Q1 FY21Q4 FY20Sequential Comparison - Main Drivers

Manufacturing

Revenue $308.7M$549.7MFewer deliveries reflecting weak demand environment

Gross Operating efficiencies from cost reduction margin 9.0% 9.4% initiatives partially mitigate lower production rates

Operating3.1% 5.4% Lower gross margin partially offset by lower margin ^(1) selling & administrative expense

Deliveries 2,700 4,900 ^(2)

Wheels, Repair & Parts

Revenue $65.6M $64.8M Increased scrap pricing partially offset by continued volume pressure

Gross 3.9% 6.0% Volume pressure and operating inefficiencies frommargin weak demand environment

Operating(0.3)% 1.3% margin^ (1)

Leasing & Services

Revenue $28.7M $22.0M Higher externally sourced syndication activity and lease income

Externally sourced syndication activity reduces Gross 35.8% 53.2% gross margin % although generating positive margin gross margin dollars; Excluding this activity, gross margin % was 47.5%

Operating Lower gross margin partially offset by lower margin^ (1)20.5% 29.7% selling & administrative expense (3)

Fleet 93.3% 90.4% utilization

^ See supplemental segment information on page 10 for additional information.(1)

^ Excludes Brazil deliveries which are not consolidated into manufacturing(2) revenue and margins.

^ Includes Net gain on disposition of equipment, which is excluded from gross(3) margin.

Conference CallGreenbrier will host a teleconference to discuss its first quarter 2021 results. In conjunction with this news release, Greenbrier has posted a supplemental earnings presentation to our website.

Teleconference details are as follows:

* January 6, 2021 * 8:00 a.m. Pacific Standard Time * Phone: 1-630-395-0143, Password: "Greenbrier" * Real-time Audio Access: ("Newsroom" at http://www.gbrx.com)

Please access the site 10 minutes prior to the start time.

About GreenbrierGreenbrier, headquartered in Lake Oswego, Oregon, is a leading international supplier of equipment and services to global freight transportation markets. Greenbrier designs, builds and markets freight railcars and marine barges in North America. Greenbrier Europe is an end-to-end freight railcar manufacturing, engineering and repair business with operations in Poland, Romania and Turkey that serves customers across Europe and in the nations of the Gulf Cooperation Council. Greenbrier builds freight railcars and rail castings in Brazil through two separate strategic partnerships. We are a leading provider of freight railcar wheel services, parts, repair, refurbishment and retrofitting services in North America through our wheels, repair & parts business unit. Greenbrier offers railcar management, regulatory compliance services and leasing services to railroads and related transportation industries in North America. Through unconsolidated joint ventures, we produce industrial and rail castings, and other components. Greenbrier owns a lease fleet of 8,400 railcars and performs management services for 407,000 railcars. Learn more about Greenbrier at www.gbrx.com.

THE GREENBRIER COMPANIES, INC.

Consolidated Balance Sheets

(In thousands, unaudited)

November 30, August 31, May 31, February 29, November 30, 2020 2020 2020 2020 2019

Assets

Cash and cash equivalents $ 724,547 $ 833,745 $ 735,258 $ 169,899 $ 253,602

Restricted cash 8,547 8,342 8,704 8,569 8,648

Accounts receivable, net 240,668 239,597 261,629 326,229 313,786

Inventories 490,282 529,529 675,442 709,115 733,806

Leased railcars for syndication 51,087 107,671 136,144 255,073 135,319

Equipment on operating leases, net 445,542 350,442 355,841 385,974 396,187

Property, plant and equipment, net 696,333 711,524 719,155 723,326 730,730

Investment in unconsolidated affiliates 72,254 72,354 75,508 79,082 85,141

Intangibles and other assets, net 186,509 190,322 181,315 160,709 162,089

Goodwill 130,315 130,308 130,035 129,684 129,468

$ 3,046,084 $ 3,173,834 $ 3,279,031 $ 2,974,660 $ 2,948,776

Liabilities and Equity

Revolving notes $ 276,248 $ 351,526 $ 416,535 $ 37,196 $ 29,502

Accounts payable and accrued liabilities 434,138 463,880 488,969 499,898 527,789

Deferred income taxes 10,120 7,701 4,354 9,173 9,417

Deferred revenue 36,916 42,467 63,536 70,869 59,657

Notes payable, net 797,089 804,088 806,919 811,860 817,830

Contingently redeemable noncontrolling interest 30,711 31,117 30,611 30,782 31,723

Total equity - Greenbrier 1,280,407 1,293,043 1,291,221 1,286,472 1,281,808

Noncontrolling interest 180,455 180,012 176,886 201,410 191,050

Total equity 1,460,862 1,473,055 1,468,107 1,487,882 1,472,858

$ 3,046,084 $ 3,173,834 $ 3,279,031 $ 2,947,660 $ 2,948,776

THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

Three Months Ended

November 30,

2020 2019

Revenue

Manufacturing $ 308,722 $ 657,367

Wheels, Repair & Parts 65,556 86,608

Leasing & Services 28,711 25,384

402,989 769,359

Cost of revenue

Manufacturing 280,890 581,912

Wheels, Repair & Parts 62,984 81,892

Leasing & Services 18,444 13,366

362,318 677,170

Margin 40,671 92,189

Selling and administrative 43,707 54,364

Net gain on disposition of equipment (922) (3,959)

Earnings (loss) from operations (2,114) 41,784

Other costs

Interest and foreign exchange 11,103 12,852

Earnings (loss) before income taxes and earnings (loss) from unconsolidated (13,217) 28,932 affiliates

Income tax benefit (expense) 7,332 (5,994)

Earnings (loss) before earnings (loss) from unconsolidated affiliates (5,885) 22,938

Earnings (loss) from unconsolidated affiliates (744) 1,073

Net earnings (loss) (6,629) 24,011

Net earnings attributable to noncontrolling interest (3,343) (16,342)

Net earnings (loss) attributable to Greenbrier $ (9,972) $ 7,669

Basic earnings (loss) per common share $ (0.30) $ 0.24

Diluted earnings (loss) per common share $ (0.30) $ 0.23

Weighted average common shares

Basic 32,723 32,629

Diluted 32,723 33,284

Dividends declared per common share $ 0.27 $ 0.25

THE GREENBRIER COMPANIES, INC.

Consolidated Statements of Cash Flows

(In thousands, unaudited)

Three Months Ended

November 30,

2020 2019

Cash flows from operating activities:

Net earnings (loss) $ (6,629) $ 24,011

Adjustments to reconcile net earnings (loss) to net cash

provided by (used in) operating activities:

Deferred income taxes 2,338 (6,515)

Depreciation and amortization 26,046 29,335

Net gain on disposition of equipment (922) (3,959)

Accretion of debt discount 1,419 1,350

Stock based compensation expense 4,435 3,157

Noncontrolling interest adjustments (1,271) 1,736

Other 560 (391)

Decrease (increase) in assets:

Accounts receivable, net (6,377) 58,488

Inventories 13,404 (69,662)

Leased railcars for syndication 6,222 (13,132)

Other assets 2,224 (37,304)

Increase (decrease) in liabilities:

Accounts payable and accrued liabilities (27,257) (47,421)

Deferred revenue (5,521) (10,012)

Net cash provided by (used in) operating activities 8,671 (70,319)

Cash flows from investing activities:

Proceeds from sales of assets 8,691 27,463

Capital expenditures (38,604) (23,216)

Investment in and advances to/repayments from unconsolidated affiliates 4,526 (1,500)

Cash distribution from unconsolidated affiliates and other 488 4,452

Net cash provided by (used in) investing activities (24,899) 7,199

Cash flows from financing activities:

Net changes in revolving notes with maturities of 90 days or less (9,738) 2,399

Proceeds from revolving notes with maturities longer than 90 days 110,000 -

Repayments of revolving notes with maturities longer than 90 days (175,000) -

Repayments of notes payable (8,908) (9,749)

Debt issuance costs - (4)

Dividends (9,180) (343)

Cash distribution to joint venture partner (2,810) (4,531)

Tax payments for net share settlement of restricted stock (2,337) (1,870)

Net cash used in financing activities (97,973) (14,098)

Effect of exchange rate changes 5,208 981

Decrease in cash and cash equivalents and restricted cash (108,993) (76,237)

Cash and cash equivalents and restricted cash

Beginning of period 842,087 338,487

End of period $ 733,094 $ 262,250

Balance Sheet Reconciliation:

Cash and cash equivalents $ 724,547 $ 253,602

Restricted cash 8,547 8,648

Total cash and cash equivalents and restricted cash as presented above $ 733,094 $ 262,250

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, excluding backlog and delivery units, unaudited)

Reconciliation of Net earnings (loss) to Adjusted EBITDA

Three Months Ended

November 30, August 31,

2020 2020

Net earnings (loss) $ (6,629) $ 7,691

Interest and foreign exchange 11,103 10,596

Income tax expense (benefit) (7,332) 2,306

Depreciation and amortization 26,046 27,398

Severance expense - 5,919

ARI integration related costs - 1,750

Adjusted EBITDA $ 23,188 $ 55,660

Three Months Ended

November 30,

2020

Backlog Activity (units) ^(1)

Beginning backlog 24,600

Orders received 2,900

Production held as Leased railcars for syndication (700)

Production sold directly to third parties (2,900)

Ending backlog 23,900

Delivery Information (units) ^(1)

Production sold directly to third parties 2,900

Sales of Leased railcars for syndication 200

Total deliveries 3,100

^ Includes Greenbrier-Maxion, our Brazilian railcar manufacturer, which is(1) accounted for under the equity method

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, except per share amounts, unaudited)

Operating Results by Quarter for 2020 are as follows:

First Second Third Fourth Total

Revenue

Manufacturing $ 657,367 $ 489,943 $ 653,007 $ 549,654 $ 2,349,971

Wheels, Repair & Parts 86,608 91,225 82,024 64,813 324,670

Leasing & Services 25,384 42,680 27,526 21,958 117,548

769,359 623,848 762,557 636,425 2,792,189

Cost of revenue

Manufacturing 581,912 422,309 562,793 498,155 2,065,169

Wheels, Repair & Parts 81,892 84,373 75,001 60,923 302,189

Leasing & Services 13,366 30,830 17,232 10,272 71,700

677,170 537,512 655,026 569,350 2,439,058

Margin 92,189 86,336 107,531 67,075 353,131

Selling and administrative expense 54,364 54,597 49,494 46,251 204,706

Net gain on disposition of equipment (3,959) (6,697) (8,775) (573) (20,004)

Earnings from operations 41,784 38,436 66,812 21,397 168,429

Other costs

Interest and foreign exchange 12,852 12,609 7,562 10,596 43,619

Earnings before income tax and earnings (loss) 28,932 25,827 59,250 10,801 124,810 from unconsolidated affiliates

Income tax expense (5,994) (7,463) (24,421) (2,306) (40,184)

Earnings before earnings (loss) from 22,938 18,364 34,829 8,495 84,626 unconsolidated affiliates

Earnings (loss) from unconsolidated affiliates 1,073 1,651 1,040 (804) 2,960

Net earnings 24,011 20,015 35,869 7,691 87,586

Net earnings attributable to noncontrolling interest (16,342) (6,386) (8,097) (7,794) (38,619)

Net earnings (loss) attributable to $ 7,669 $ 13,629 $ 27,772 $ (103) $ 48,967 Greenbrier

Basic earnings per common share ^(1) $ 0.24 $ 0.42 $ 0.85 $ (0.00) $ 1.50

Diluted earnings per common share ^(1) $ 0.23 $ 0.41 $ 0.83 $ (0.00) $ 1.46

Dividends declared per common share $ 0.25 $ 0.27 $ 0.27 $ 0.27 $ 1.06

Quarterly amounts may not total to the year to date amount as each period is calculated discretely. Diluted EPS is calculated by including the^ dilutive effect, using the treasury stock method, associated with shares(1) underlying the 2.875% Convertible notes, 2.25% Convertible notes, restricted stock units that are not considered participating securities and performance based restricted stock units subject to performance criteria, for which actual levels of performance above target have been achieved.

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, unaudited)

Segment Information

Three months ended November 30, 2020:

Revenue Earnings (loss) from operations

External Intersegment Total External Intersegment Total

Manufacturing $ 308,722 $ 20,591 $ 329,313 $ 9,686 $ 2,505 $ 12,191

Wheels, Repair & Parts 65,556 301 65,857 (200) (9) (209)

Leasing & Services 28,711 4,665 33,376 5,890 4,285 10,175

Eliminations - (25,557) (25,557) - (6,781) (6,781)

Corporate - - - (17,490) - (17,490)

$ 402,989 $ - $ 402,989 $ (2,114) $ - $ (2,114)

Three months ended August 31, 2020:

Revenue Earnings (loss) from operations

External Intersegment Total External Intersegment Total

Manufacturing $ 549,654 $ 1,683 $ 551,337 $ 29,695 $ (19) $ 29,676

Wheels, Repair & Parts 64,813 95 64,908 813 3 816

Leasing & Services 21,958 10,898 32,856 6,520 10,528 17,048

Eliminations - (12,676) (12,676) - (10,512) (10,512)

Corporate - - - (15,631) - (15,631)

$ 636,425 $ - $ 636,425 $ 21,397 $ - $ 21,397

Total assets

November 30, August 31, 2020 2020

Manufacturing $ $ 1,301,715 1,264,616

Wheels, Repair & Parts 274,534 271,862

Leasing & Services 758,820 739,025

Unallocated 748,114 861,232

$ $ 3,046,084 3,173,834

THE GREENBRIER COMPANIES, INC.

Supplemental Information

(In thousands, except per share amounts, unaudited)

Reconciliation of common shares outstanding

The shares used in the computation of the Company's basic and diluted earnings(loss) per common share are reconciledas follows:

Three Months Ended

November 30, August 31,

2020 2020

Weighted average basic common shares outstanding ^(1) 32,723 32,658

Dilutive effect of convertible notes ^(2) - -

Dilutive effect of restricted stock units ^(3) - -

Weighted average diluted common shares outstanding 32,723 32,658

Restricted stock grants and restricted stock units that are considered^ participating securities, including some grants subject to certain(1) performance criteria, are included in weighted average basic common shares outstanding when the Company is in a net earnings position.

^ The dilutive effect of the 2.875% Convertible notes issued in February 2017(2) and the 2.25% Convertible notes issued in July 2019 were excluded from the share calculations due to a net loss in each period.

Restricted stock units that are not considered participating securities and^ restricted stock units subject to performance criteria, for which actual(3) levels of performance above target have been achieved, are included in weighted average diluted common shares outstanding when the Company is in a net earnings position.

Reconciliation of Net earnings (loss) attributable to Greenbrier to Adjustednet earnings (loss) attributable toGreenbrier

Three Months Ended

November 30, August 31,

2020 2020

Net earnings (loss) attributable to Greenbrier $ (9,972) $ (103)

ARI integration related costs, net of tax ^(1) - 1,936

Severance expense, net of tax & noncontrolling interest ^(2) - 3,636

Adjusted net earnings (loss) attributable to Greenbrier $ (9,972) $ 5,469

^(1) Net of tax of $620.

^(2) Net of tax and noncontrolling interest of $2,283.

Reconciliation of Diluted earnings (loss) per share to Adjusted dilutedearnings (loss) per share

Three Months Ended

November 30, August 31,

2020 2020

Diluted earnings (loss) per share $ (0.30) $ 0.00

ARI integration related costs, net of tax - 0.06

Severance expense, net of tax & noncontrolling interest - 0.10

Adjusted diluted earnings (loss) per share $ (0.30) $ 0.16

Weighted average diluted shares used to calculate 32,723 33,519Adjusted diluted earnings (loss) per share

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: This press release may contain forward-looking statements, including any statements that are not purely statements of historical fact. Greenbrier uses words, and variations of words, such as "adjust," "align," "believe," "continue," "ensure," "focus," "maintain," "managing," "target," "will," "working," and similar expressions to identify forward-looking statements. These forward-looking statements include, without limitation, statements about backlog, and future liquidity and cash flow as well as other information regarding future performance and strategies and appear throughout this press release including in the headlines and the section "Business Update & Outlook." These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors that might cause such a difference include, but are not limited to, the following. (1) We are unable to predict when, how, or with what magnitude COVID-19 governmental reaction to the pandemic, and related economic disruptions will negatively impact our business: we may be prevented from operating our facilities; the operations of our customers may be disrupted increasing the likelihood that our customers may attempt to delay, defer or cancel orders, or cease to operate as going concerns; the operations of our suppliers may be disrupted; our indebtedness may increase; we may breach the covenants in our credit agreement; the market price of our common stock may drop or remain volatile; we may incur significant employee health care costs under our self-insurance programs. The longer the pandemic continues, the more likely that negative impacts on our business will occur, some of which we cannot now foresee. (2) Our backlog of railcar units and marine vessels is not necessarily indicative of future results of operations. Certain orders in backlog are subject to customary documentation which may not occur. Customers may attempt to cancel or modify orders or refuse to accept and pay for products. The likelihood of cancellations, modifications, rejection and non-payment for our products generally increases during periods of market weakness. The timing of converting backlog to revenue is also materially impacted by our decision whether to lease railcars, sell railcars, or syndicate railcars with a lease attached to an investor. More information on potential factors that could cause our results to differ from our forward-looking statements is included in the Company's filings with the SEC, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed periodic report on Form 10-K and subsequent report on 10-Q. Except as otherwise required by law, the Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof.

Adjusted Financial Metric DefinitionsAdjusted EBITDA, Adjusted net earnings (loss) attributable to Greenbrier and Adjusted diluted EPS are not financial measures under generally accepted accounting principles (GAAP). These metrics are performance measurement tools used by rail supply companies and Greenbrier. You should not consider these metrics in isolation or as a substitute for other financial statement data determined in accordance with GAAP. In addition, because these metrics are not a measure of financial performance under GAAP and are susceptible to varying calculations, the measures presented may differ from and may not be comparable to similarly titled measures used by other companies.

We define Adjusted EBITDA as Net earnings (loss) before Interest and foreign exchange, Income tax benefit (expense), Depreciation and amortization and excluding the impact associated with items we do not believe are indicative of our core business or which affect comparability. We believe the presentation of Adjusted EBITDA provides useful information as it excludes the impact of financing, foreign exchange, income taxes and the accounting effects of capital spending. These items may vary for different companies for reasons unrelated to the overall operating performance of a company's core business. We believe this assists in comparing our performance across reporting periods.

Adjusted net earnings (loss) attributable to Greenbrier and Adjusted diluted EPS excludes the impact associated with items we do not believe are indicative of our core business or which affect comparability. We believe this assists in comparing our performance across reporting periods.

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SOURCE The Greenbrier Companies, Inc.